Advice on avoiding some of the pitfalls that can be involved in wine investment. News of wine investment scams. Say no to cold callers. Don't buy investment wines from companies you don't know or haven't checked out.
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Friday, 15 July 2011

One very obvious lesson from the convictions in the Bordeaux Wine Trading Company Ltd and International Wine Commodities Ltd is how ideally suited en primeur is to fraud. It is indeed a gold plated vehicle for fraud. Had Craven and Hayble been really clever rather than merely greedy, particularly Craven, they could well have covered their tracks and disappeared with a substantial portion of the £1.2 million looted from investors.

Curiously only this week I received a query from a potential investor (TG) who had been contacted by Worldwide Wine Investments Ltd (WWI), who are based at Luminous House, 300 South Row Milton Keynes, MK9 2FR. Although set up in March 2007 the company traded as Clearpoint Trading until 15th October 2010, when it changed its name to Worldwide Wine Investments Ltd. The registered office was also changed from 145-157 St John Street, London EC1V 4PY.

From the company's website it is clear that they have made rapid progress since October 2010 – 'we are a unique high-end wine investment brokerage specialising solely on the crême de la crême Bordeaux wines making you the best returns possible'.

'If you look at wine-searcher you will see that Worldwide Wine Investments price for the 2010 Lafite-Rothschild (WS: £11675) is lower than any price shown. Similarly with the Mouton 2010 (WS: £7639).

Although it may look reasonable and a good deal, you might wonder how a newly set up company is able to offer lower prices than its competitors given that it is highly unlikely that it will have been able to buy direct from Bordeaux. Instead will have had to buy from its UK competitors.'

TG told me that the sales staff had told him that they had between 160 and 210 cases of 2010 Lafite. I assume this must have been said in jest as even a major player like Berry Bros & Rudd are thought have had only around some 200 cases of 2010 Lafite to offer to their customers this year en primeur. The amount of 2010 en primeur wine the First Growths have released this campaign is significantly less – probably the smallest ever.

Today at St Albans Crown Court Paul Craven was sentenced to six years for fraudulent trading in connection with the Bordeaux Wine Trading Company Ltd. Oseghale Hayble was sentenced to five years for the same offence for International Wine Commodities.

The maximum sentence is seven years for a single offence.

I understand that Craven wrote to His Honour Judge John Plumstead apologising for his stupidity but the Judge said it wasn't a question of Craven's stupidity rather that he was dishonest. Craven was principally to blame for setting up the fraud. The judge said that the jury's verdict was absolutely correct and that Craven had wasted people's time and money with his highly unlikely defence through two trials.

The judge would have likely to give Craven a longer sentence but his hands were tied with seven years being the maximum.

There will now be proceedings to confiscate the fraudsters' assets.

The investigation was carried out by the Economic Crime Unit of Hertfordshire Police.

Wednesday, 13 July 2011

There are a number of reasons why I'm delighted that Paul Craven, 'managing director' of the Bordeaux Wine Trading Company Ltd (BWTC) was found guilty of fraudulent trading on Monday at the second time of asking.

The guilty verdict shows that you can't just take investors' money on the pretence that you are buying Bordeaux en primeur, and instead blow it on a succession of cars, expensive watches, almost continuous holidays, a flat and £100 a week cocaine habit.

During his evidence Craven said he was proud to be 'managing director' of a company that was doing well. In reality Craven was the looter in chief – very far from the 'managing director'. Ann Evans, the Crown Prosecutor was right when she told Craven – "You treated BWTC as your own private piggy bank".

I'm delighted because it underlines that a jury often comes to the right decision in drinks investment trials. At the end of the first trial last autumn the jury couldn't decide whether Craven and Oseghale Hayble were guilty in relation to BWTC, so there had to be a retrial. As previously reported Hayble became ill during the trial, so Craven was left as the sole defendant. I suspect that at the first trial the jury, faced with a number of defendants and three different companies – BWTC, International Wine Commodities and Templar Vintners, they felt they couldn't safely convict Craven for his part in BWTC.

Happily this time it was different. In the full glare Craven's threadbare defence was evident. It was not in dispute that the company had never bought any wine for its investor clients. Instead Craven claimed that it was Hayble, who had been responsible for buying the wine. He maintained that he assumed that Hayble was buying wine. Craven, the sole signatory on the bank account for much of BWTC's fraudulent life, claimed he had taken Hayble's word as his bond as he passed over wads of cash in brown envelopes to Hayble. Laughably Craven explained that Hayble had told him that if he paid for the wine in cash they would get a 50%-60% discount of the First Growths they were selling to their clients.

Craven claimed that he was still passing great wads of cash over to Hayble even after Hayble had left to set up the equally fraudulent International Wine Commodities Ltd. On one occasion £85,000 was "handed over" in the car park of the Maze Inn in North London. Curiously Craven never thought to ask for a receipt for any of this cash. Nor did he appear to think it curious that there were no receipts for wine bought, although the company did keep records of invoices and bills for office furniture, computers and the like. Furthermore Craven acknowledged that one of his few tasks at the company was to check the bills. No receipts for the £1.2 million taken from BWTC's clients to buy investment wines? "I trusted Hayble – took his word as his bond," said Craven.

Yet at the same time Craven claimed in the witness box that Hayble was spending a lot of time in night clubs – drinking heavily and snorting cocaine. No receipts for the cash handed over! Flying pigs territory! The simple answer was it was never Craven's intention to buy any wine. From his very short time as a salesman at the Bordeaux Wine Company Craven had learned that there is easy money to be made in flogging wine as an investment to naive punters. Even easier, if as was the case with BWTC, you simply trouser your clients' cash.

It is clear from the unanimous guilty verdict that Craven gained no friends from his egotistical display in the witness box. Although he mouthed some platitude about having "a duty of care to BWTC investors to ensure that their wine was bought", Craven couldn't have cared less about the clients he had fleeced to provide him with coke, flashy cars, smart clothes, designer watches etc. The only person he felt sorry for was – Paul Craven – the last defendant and in prison on remand. "I've been left to carry the can!" he bleated.

Testimony from the sales force painted Craven as a bully who could be charming when he wanted to be but was unpredictable. Craven insisted that his boiler room sales team pounded the phones incessantly – not as it turned out because of a work ethic but to pour more cash into his pockets. "It was sometimes difficult to even get a coffee," said one of the salesmen.

At the autumn trial Hayble along with Benedict Moruthoane were found guilty for their part in the International Wine Commodities fraud and, in addition, Moruthoane for the Templar Vintners fraud. On 5th January 2011 Moruthoane was sentenced to 7.5 years, which is a considerable sentence for fraud.

On Thursday it will be the turn of Paul Craven and Oseghale Hayble – I hope they, too, get substantial sentences.

It was extraordinary to watch convicted fraudster, Frederick Achom, give evidence that he is a partner in the Bordeaux Wine Company Ltd, a wine investment company set up in 2002 by Achom and his fellow fraudster – Anthony Grant. Both men were banned in 2002 from being directors for 11 years until July 2013. Yet here they are running a wine investment company as shadow directors. Achom testified that up until 2006 was he was in charge of buying the wine, while from other testimony given during the trial it is clear that Anthony Grant is fully involved in the day to day running of the company, particularly in managing and training the sales staff.

Why one might wonder bother to ban people from being directors if you are not going to enforce these bans?

Sunday, 3 July 2011

Between 21st July 2006 and 19 June 2008 knowingly party to the carrying on a business of a company Bordeaux Wine Trading Company with the intent to defraud the creditors of said company, BWTC took £1.2 million from its clients. Only £12,200 has been recovered.

It is accepted that the Bordeaux Wine Trading Company Ltd bought none of the wine (all en primeur) that their clients ordered.

Samantha Cohen, Craven's defence barrister, took Craven through his evidence starting with his time with Bordeaux Wine Trading and, in particular, his admiration for Freddy Achom's life style. Craven saw Achom a couple of times flying past in a Ferrari and a Lamborghini along with tales of weekends in Monte Carlo and Cannes. Craven agreed that he thought "I wouldn't mind a bit of that lifestyle myself".

In the summer of 2006 Craven said he asked Nik Cashman if he fancied setting up a similar business to BWC? Cashman readily agreed on the condition that we can get Oseghale Hayble on board. The spark to set up BWTC had come from Paul Craven. However, he said that "I didn't have a clue about what we were doing. At this point I had only had 4-6 weeks experience in wine investment, whereas Nik had had one year and Oseghale had several years' experience".

Craven said that he had a meeting with Hayble to sound him out in an All Bar One at Oxford Circus. Hayble agreed to join them if "I can purchase the wine". Craven explained how they set up the company and Ms Cohen took him through a number of invoices and bills for office furniture, computers, the Goldmaine program and the like. Craven was the sole signatory on the bank account. Checking bills was part of Craven's management role.

Hayble persuaded a number of sales staff to come across from the Bordeaux Wine Company. Niklaus Cashman and Hayble did the job interviews. "I didn't know what was needed to be a good salesman," said Craven.

The content for BWTC brochure and website was copied from the Bordeaux Wine Company. "It was put together by Nik and Ose. I had no substantial input, although I did read it through."

"Ose was always meant to purchase the wines. I couldn't even pronounce the châteaux's names for the first six months. I didn't have one contact in the wine trade. Ose told me that he was dealing with Bud Cuchet, buying director of Fine & Rare Wines Ltd." Craven was shown an email sent on 9th February 2007 from Cuchet enclosing a list of 'what we can offer'. Craven didn't think he had seen this email.

(Although there was contact with Fine & Rare Ltd, a fine wine broking company established in 1994, no orders were placed or wine bought.)

It was Ose's signature on the certificates sent out to investors. Craven never sold a case of wine at BWTC. "I couldn't do it. Hours and hours of conversation on the phone. Let them get on with it really."

"Ose was meant to be dealing with the wines." It was Ose who decided what price to charge for the wines. "I wouldn't have known what price to charge," said Craven. "We gave Ose cash to purchase wine." Although Craven was the sole signatory on the bank account until September 2007 when Cashman became a signatory, the company debit card was for Hayble and Cashman's use. "The card was there to be used," said Craven.

On 3rd January 2007 Hayble and Craven became directors of the company. "I felt good about it – managing director of a company doing well. It was recognition."

Their secretary Lauren Reynolds was with the company for between 4-7 months. From time to time she would be kicked out of the office. "It was so Ose and I could sort out the money and for general chat. We would be handling 10s of thousands of £s, so we didn't want her to see this."

Ms Cohen asked Craven why they had paid for the wine in cash. "Ose told me that if we paid in cash then we would get a 50-60% discount for cash. Ose put us all in the shit because he didn't buy the wine – I wouldn't have known that he wasn't buying it."

Craven described how Hayble was given wads of money – £85,000 in one instance – in brown envelopes. "We were buying wines en primeur – wines that would not be delivered for 18 months to two years." Craven explained that they had a computer program that would allow password protected access to the accounts from anywhere in the world.

In July 2007 Hayble resigned as a director of the Bordaux Wine Trading Company telling Craven that he wasleaving to set up a modelling agancy. Craven claimed that he and Hayble had "a firm agreement that Ose would continue to purchase wine – "he would take cash and purchase wine. This was what was supposed to be happening." Craven explained that he met Ose at various places. "We met at the Maze Inn – sometimes in the carpark and sometimes inside. Ose, who could log in to see what had been sold, was always given the money in cash to purchase wine," insisted Craven.

From April 2006 he had worked at the Bordeaux Wine Company, a wine investment company set up in 2002, where he had met Oseghale Hayble, who was his line manager. At BWC his role was to cold call from qualified leads. BWC sold First and Second Growth wines – both finished wines and en primeur. Anthony Grant was his manager with Hayble as his deputy.

After Hayble left BWC he contacted Creaton to offer him a job with the his new company – The Bordeaux Wine Trading Company (BWTC). He decided to accept as the pay was better with a more favourable commission structure and the offices in Potters Bar were closer to his home whereas BWC was based in Central London.

As at BWC the sales force at BWTC used Goldmine, a software progam to keep track of clients. The sales force used a script provided in a folder.

Hayble was again his line manager, who spent most of his time with the sales team. Creaton described Hayble as “very fair, generally a nice manager”. Paul Craven wasn’t in the office generally spending his time when he was there in the back office. “Craven was very insistent that the sales team should be on the phone – even getting a coffee was hard.”

There were two white boards in the sales room. One recorded the sales made by the staff. It was Hayble, who kept this board up to date. The other board listed the five First Growths and their prices. The list of wines never changed, although the prices did. There was no indication of the quantity of wines available and it was Craven who changed the prices. Samantha Cohen, Craven’s barrister, challenged Creaton whether he was correct to say that it was Craven who updated the prices. Although pressed on this, Creaton maintained that it was Craven who updated the prices.

In time Creaton become concerned about BWTC and whether the wines were being bought. As he came to learn more about the fine wine market an off-the-cuff remark by Craven that he was off to Bordeaux to buy wine was a catalyst for his concerns

In time Creaton stopped selling and started to look for a new job. He was asked about the cars that Paul Craven drove and mentioned that Craven had a series of one car after another. This included a black Porsche, Golf and a motorbike – £10,000 new bike.

James Seaton

Seaton was another salesman at the Bordeaux Wine Company Ltd where he spent about 18 months. He was trained by Hayble and met Paul Craven at BWC. His role there was to cold call potential clients and to follow up calls.

In January 2007 he was contacted by Craven, who told him that he could earn better money. He accepted and started work at BWTC’s office in Potters’ Bar in February 2007. His day-to-day contact was with Hayble.

Initially working at BWTC went OK but as time went on it became more and more chaotic, especially once Hayble left in ‘September-October 2007. “Nothing organized.”

Seaton was asked about the two white boards. One had targets and amounts of wine that had been sold by the sales team. The other listed the prices of the wines to be sold. He didn’t know how much wine there was to sell.

Seaton had no contract of employment with BWTC. By January 2008 the company was disorganised “It was a chaotic place to work.”

Cross examined by John Femi-Ola, Hayble’s barrister, Seaton said that Hayble drove a black Honda, while Craven was “living it large’. Seaton listed the cars that Craven drove: a Range Rover, black Porsche, sports motorbike, a BMW convertible and a Golf Sports. “But not all at the same time,” Seaton added.

Seaton explained that from time to time Paul would offer special one-off-commission deals on wines – known as spivs. These were offered “apparently at Paul’s whim. Ose was much easier to deal with. Appeared to me that Paul was a law to himself.”

From August 2007 after Hayble had left “the business went down the drain. The admin collapsed. The secretary left and wasn’t replaced. The office was manic and chaotic. Craven was in the office less and less. Sarah, Paul’s partner, would come in from time to time.”

Seaton was asked by Femi-Ola, who he thought was responsible for buying the wine in the period from August 2007 to January 2008 after the departure of Hayble. Seaton wasn’t aware of who was responsible for buying the wine. His Honor Judge Plumstead listed for Seaton the people who had left the company and the person still at the company – Paul Craven.

Frederick Achom

Partner in the Bordeaux Wine Company

Frederick Achom is a partner in the Bordeaux Wine Company Ltd (BWC), a wine investment company established in 2002. Craven and Hayble worked for BWC prior to setting up BWTC. Achom explained that the company offers both bottled wines and en primeur. They purchase from UK based merchants – top wine merchants – as well as from France and Switzerland and négociants in Bordeaux. He described BWC’s invoice to customer system for en primeur including an allocation confirmation certificate, showing who they had bought the wine from. In 2006 he had a 12-15 strong sales force and the company was turning over £3.5 million. The sales’ staff were paid a basic wage of £25,000 with between 2%-4% commission.

Up to 2006 it was Achom who bought wine – now it is Arlene King.

Achom explained that their margins were “way higher when they started” and that they were “slightly over-priced”. He said that the 2005 vintage was the beginning of the boom and that certain wines were increasing in price by 30% a year. 2000 Lafite had gone from £3000 to nearly £20,000.

Hayble worked for BWC off and on for a number of years. His periods of work at BWC would be interspersed by his time modelling and acting. In all he probably worked seriously for BWC for 18 months. Achom was aware that Paul Craven had worked briefly for BWC but he had never met him.

Achom was asked by prosecutor Ann Evans whether he was aware that he was a hero to Paul Craven. “He looked up to you. Your success – your cars: Lamborghini etc.” Achom was not aware that Craven took him for a role model.

In June 2006 Hayble told Achom over lunch that he was going to Los Angeles to see if he could make a real go of his acting career. However, later Achom learnt when he started receiving phone calls from BWC clients, who had been contacted by BWTC, that Hayble had actually set a rival wine investment company with Paul Craven. “When we checked the prices BWTC were offering on wine-searcher, they were way too low,” said Achom. BWTC were selling below the market price.

Achom was asked about a phone call he made to Hayble in October 2008, after Hayble had gone on to set up International Wine Commodities Ltd, challenging him saying “Up to your old frauds again!”

Achom was also asked about how companies pay for the wine they order. “We pay by bank transfer or by cheque. The idea of paying for wine using bundles of cash in brown envelopes is a nonsense.” Craven would claim repeatedly when he gave evidence this week (30th June – 1st July) that it was Hayble’s responsibility to buy the wine and that he was given money in brown envelopes for this purpose.

* Later in this week Hayble became ill and proceedings against him were halted with the jury discharged from considering his case. Craven is now the sole defendant in this trial. A report on his time in the witness box will be added shortly.

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